If you’re thinking of buying or selling a property abroad, then one of the first questions you’re likely to have is how, exactly, do you transfer large sums of money internationally. International property transactions are a huge financial commitment, and the complexity of the process is only complicated by the fact that there is often more than one currency involved. International money transfers via a transfer company can help to make the whole process much smoother: here’s everything you need to know.
Why Choose a Money Transfer Service?
There are many benefits of choosing a money transfer service to take care of your money transfer when it’s time to purchase your overseas property. They offer both convenience, and affordability.
Before you approach a money transfer service, you may wish to go to your bank first. In almost all cases, it is much more affordable to use a money transfer service than it is to use a bank, but by getting a quote from your bank, you will be in a better position to make comparisons when you get other quotes from the money transfer services you are thinking of using. That should give you the peace of mind of knowing that the money transfer company option is the right option for you!
When looking for a money transfer service, look for one that offers:
The lowest exchange fees and best exchange rates (be aware that exchange rates are likely to change on a daily basis)
No hidden charges or fees
Exchange Rate is King.
If you hear only one thing from this piece, let it be that the most important thing to look for when choosing a money transfer service is the exchange rate available. The exchange rate is king: securing a favourable exchange rate can be the difference between losing or saving hundreds to thousands of pounds. If you get an exchange rate that is even slightly higher than you were expecting (or than you had seen the day before, or at another company) then it could cost you anything from hundreds to thousands of pounds, depending on the purchase or sale price of your property.
Don’t be afraid to shop around until you find the lowest exchange rate: Don’t make the mistake of losing money that you could have saved with a better exchange rate, after all, you’ll only be spending extra money you simply don’t have to spend.
Using a Forward Currency Contract.
If you have already found the property of your dreams, but can’t complete the payment until a future date, you might want to consider using a forward currency contract. This is something that many money transfer services will be able to organise for you. Not sure what a forward currency contract is? It is effectively a FX tool that will allow you to lock in the GBP/EUR exchange rate on the date you choose, meaning that if the exchange rate fluctuates, then the price you will pay for your property won’t be affected.
Whilst it is possible that the exchange rate could change (in your favour) after you have already fixed it, ultimately, the result is complete peace of mind: you don’t have to worry about the exchange rate dropping unfavourably against the pound, resulting in your property purchase costing you hundreds (or even thousands) more pounds than you were expecting.
It is not unheard of for this to happen, and the result to be that the purchase price was no longer affordable and the sale was lost, so this kind of peace of mind when dealing with such large sums is incredibly valuable.
Remember to Calculate Additional Fees.
Once you have chosen the right money transfer service for you, about any possible fees or charges that may apply to your transaction. These include not only their own transfer fees, but also the overseas bank receiving fees that many often by charged by your overseas bank account (or that of your seller or estate agent, depending on where you are sending your money).
You should also be aware of the financial tax implications of sending large sums of money overseas: there will be a certain amount that you can send tax-free, but beyond that, you may have to pay tax on the amount of money you send. This is something that your accountant at info@Expat-Tax-Advice.co.uk will be able to offer more detail on.
Think Safety First.
The most important thing to consider when sending large sums of money overseas is whether the transfer method you have chosen is safe. You should
always think safety first: Firms that provide payment services such as money transfer are required to be authorised or registered with the Financial Conduct Authority (FCA). You can ensure the company you are using is registered with the FCA by searching the financial services register. If your transfer company isn’t registered then, no matter how great their rates are, it is unlikely to be the safest option for you.
Consider the Size of Your Transaction.
Finally, consider the size of your currency transfer: it often makes more financial sense to send one large amount (in one transaction) rather than several smaller transactions. This is because, however you decide to send your money, the golden rule is that the bigger the amount, the better the exchange rate that you will be offered. What’s more, if you send over a certain amount (this amount will vary from company to company) the transfer fees may be either reduced or even waived completely.
For these reasons, we would suggest that if you have to send the funds for several different things (your purchase price, mortgage payments and renovation costs, for example) that you consider sending all of these amounts at the same time.
The key, really, with sending money transfers overseas as with any other large financial decision, is to do your research. Before purchasing property overseas and transferring a large sum of money internationally, research the market, research your transfer options, and go into the transaction feeling fully prepared and with your eyes wide open.
Who to talk to.
The teams at Expat-Tax-Advice and Property-Tax-Advice can introduce you to their connections – drop your accountant an email.
Adapted from an excellent article in © Letting Agent Today
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